In response to the IOM patient safety agenda, an AHRQ-sponsored report has designated "localizing specific surgeries and procedures to high volume centers" as a high priority area for patient safety research. In the absence of a national quality report card, selective referral of patients to high-volume hospitals has been advocated for high-risk surgery on the grounds that procedure volume is a quality proxy. With the launching of the Leapfrog Group safety initiative, these policy recommendations are now being implemented in the private sector. Significant questions, however, have been raised regarding the strength of the evidence supporting the volume-outcome relationship. The primary objective of the proposed project is to investigate the implications of selectively referring patients to hospitals using "volume" standards as opposed to "quality" criteria. To test this hypothesis, we will first use enhanced administrative data to develop risk-adjusted measures of quality. We will then use these quality measures in a simulation to test the primary hypothesis that Regionalizing high-risk surgery by diverting patients from low-quality centers will lead to better population outcomes than diverting patients from low-volume centers. A secondary product of this project will address another central issue pertaining to the use of administrative data for bench-marking performance - namely, that secondary diagnoses do not typically distinguish between complications and preexisting conditions. The inability to separate the two is likely to lead to biased risk adjustment and inaccurate quality measures. This study will be conducted using the California State Inpatient Databases (SID). All ICD-9-CM codes within this data set are date stamped, distinguishing conditions present at the time of admission from conditions that developed following hospital admission. Only two states, California and New York, include a date stamp on all secondary diagnoses. The finding that the absence of date stamping biases quality measurement would lend support to the adoption of date stamping in other states. The knowledge gained from this project will advance the field of quality measurement and will provide information in support of rational policy making regarding the regionalization of high-risk surgery on a national scale.